La banque d'un monde qui change 2004 - BNP Paribas

In order to reflect what appeared to be a lasting declinein the real estate market, the BNP Group wrote downthe book value of the above real estate in 1997. The impactof this adjustment, net of the related deferred tax effect,was posted to consolidated shareholders’ equity, consistentwith the initial adjustment. This adjustment thereforehas no impact on consolidated net income.Other buildings and equipment are stated at cost or valuedin accordance with France’s appropriation laws of 1977and 1978. Revaluation differences on non-depreciableassets, recorded at the time of these legal revaluations,are included in share capital.Assets leased by the Bank from specialised subsidiariesare recorded as buildings, equipment and other under“Tangible and intangible assets”.The restructured real estate portfolio is depreciated overa fifty-year period starting from the date of transfer usingthe straight-line method. Depreciation of other fixed assetsis computed using the straight-line method over theirestimated useful lives.BNP Paribas and its French subsidiaries depreciate tangibleassets by the accelerated method in their individualcompany accounts. In the consolidated financial statements,depreciation is adjusted (in most cases using the straight-linemethod) to write off the cost of the depreciable assets overtheir estimated useful lives. Deferred taxes are calculated onthe adjustment.Depreciation of assets leased from Group leasing subsidiariesis reflected in the profit and loss account under “Depreciation,amortisation and provisions on tangible and intangible assets”.The capitalised cost of software purchased or developedfor internal use is recorded under “Intangible assets”and amortised by the straight-line method over the probableperiod of use of the software, not to exceed five years.Trade marks identified by the Group which have been acquiredin a business combination are tested for impairment whenthere is an indication that they may be impaired.Interbank and Money-market Items and Customer DepositsAmounts due to credit institutions are classified into demandaccounts and time deposits and borrowings. Customerdeposits are classified into regulated savings accountsand other customer deposits. These captions include securitiesand other assets sold under repurchase agreements.Accrued interest is recorded on a separate line.Debt SecuritiesDebt securities are classified into retail certificatesof deposit, interbank market securities, negotiable certificatesof deposit, bonds and other debt instruments. This captiondoes not include subordinated notes which are recordedunder “Subordinated debt”.Accrued interest on debt securities is recorded on a separateline of the balance sheet and is debited to the profit and lossaccount.Bond issue and redemption premiums are amortised bythe yield-to-maturity method over the life of the bonds.Bond issuance costs are amortised by the straight-linemethod over the life of the bonds.Country Risk ProvisionsProvisions for country risk are based on the evaluationof non-transfer risk related to the future solvency of eachof the countries at risk and on the systemic credit riskincurred by debtors in the event of a constant and durabledeterioration of the overall situation and economiesof these countries. Country risk provisions and writebacksare reflected in the profit and loss account under “Netadditions to provisions for credit risks and country risks”.Provisions for Unforeseeable Industry RisksThe Group records provisions for unforeseeable industryand other risks in order to cover losses and expenses thatare not certain of being incurred and the amount of whichcannot be reliably estimated. These provisions are reversedand replaced by specific provisions in cases where the lossor expense becomes certain and can be reliably estimated.Reserve for General Banking RisksThe BNP Paribas Group has set up a reserve for generalbanking risks in accordance with the principle of prudence.Specific additions to, and deductions from, this reserve arereflected in the profit and loss account under “Movements inthe reserve for general banking risks”.206BNP PARIBAS - ANNUAL REPORT 2004